Largest US instrument retailer Guitar Center files for bankruptcy

The New York Times reported that Guitar Center filed for bankruptcy on Saturday (21 November) in the US Bankruptcy Court of the Eastern District of Virginia.

The article notes that despite filing for bankruptcy, Guitar Center will continue to pay its employees.

As Pitchfork notes, Guitar Center experienced financial strain amid the coronavirus pandemic after being forced to close up to 75% of its stores across the US.

News of Guitar Center's bankruptcy was first reported last month by The Times and Bloomberg. A Chapter 11 bankruptcy means the company's assets, debts and business affairs will be reogranised.

Ron Japinga, the CEO of Guitar Center told Business Wire, "This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth. Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world. Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year."

Business Wire notes that the Chapter 11 will allow Guitar Center and its related brands to "operate in the normal course while the transaction is implemented", adding that Guitar Center will "continue to meet its financial obligations to vendors, suppliers, and employees, and intends to make payments in full to these parties without interruption in the ordinary course of business."